Slovenia’s Benchmark Bond Yield Rises on Europe, Homes Woes

June 19 (Bloomberg) -- Slovenia’s benchmark bond yield rose
above 6 percent for the first time since February as the debt
crisis in Europe deepens and its largest bank needs more cash
than previously announced.

The bond maturing in 2021 extended losses for the second
day, with the yield reaching 6.0047 percent at 4:40 p.m. in
Ljubljana, according to mid-pricing data compiled by Bloomberg.
The yield dropped below 6 percent in February after the European
Central Bank offered lenders in Europe cheap loans.

“It looks like the rise in bond yields is due to both
international and domestic factors,” said William Jackson, an
emerging-markets economist at Capital Economics in London.
“There is general investor risk aversion due to events in the
euro zone and it seems the Slovenian authorities have revised up
the recapitalization requirement for Nova Ljubljanska Banka
d.d., which has probably put the spotlight on domestic problems
as well.”

Slovenian banks, including Nova Ljubljanska Banka, are
relying on financing from the ECB as record losses and
uncertainty in the European banking industry limits access to
wholesale funding.

High Yields

“Yields on Slovenian bonds are pretty high,” Marko
Kranjec, governor of the country’s central bank told a business
forum in Ljubljana today. “But more of an issue is access to
funding. Access to funding could be a big problem for the
Slovenian bank industry.”

Lenders took out 2 billion euros ($2.53 billion) of ECB
loans, the Slovenian central bank said June 14, while NLB
borrowed 1.2 billion euros, according to its acting Chief
Executive Officer Bozo Jasovic.

The debt crisis in Europe is deepening as the second vote
in Greece failed to improve investors’ risk appetite and
borrowing costs in Spain and Italy continued to climb.

Nova Ljubljanska, in which the government holds an indirect
majority, needs 500 million euros in capital by the end of the
month, and even more to continue to lend to companies to support
economic growth, Finance Minister Janez Sustersic told the same
business forum attended by Kranjec.